Everybody loves money, especially spending it! Getting new toys or new clothes which make you look and feel great is important for your confidence and self-esteem. Yet how do you know if you’re good with money or not? Just because you get paid plenty of money doesn’t suggest you’re good with it. There are lots of successful people who have significant problems with money just because they weren’t familiar with the warning signs. In today’s world, it’s essential to be money conscious so here are 5 signs that you might have problems with money which can ultimately result in serious financial issues down the track.
A lot of us get complacent with our lifestyles – our car, our home, our jobs – and forget that things can actually go wrong and every person needs some financial protection for rainy days. Without any savings in the bank, what will cover you from events like hospitalisation, job loss or car accidents? If you’re living paycheque to paycheque, all it takes is one financial hit and you’ll be in a lot of trouble. You’ll have to take out a short-term, high interest loan which will only magnify the issue – you can’t save any cash now so how will you pay back an additional expense? Although it’s easy to overlook, having no savings is a recipe for disaster and you should take action now before it’s too late. Most financial advisors recommend having three to six months of living expenses in an emergency fund.
You have no idea where your money goes
Being good with money means that you know when and how much money comes in, and where it goes when you spend it. If you have no idea where your money is being spent, it illustrates a lack of care and respect for your hard-earned cash, and can obviously trigger financial complications in the future. Try creating a budget and actively following it. This will help you in having a greater appreciation of your finances so you can comprehend how much of your money is being squandered on nonessential items. After a month or so, reward yourself for sticking to your budget and you’ll value spending money on yourself a lot more.
Making minimum repayments only
If you can only afford to make the minimum repayments on your loans, especially credit cards, then you’re heading for financial problems. It can take many years, even decades, to clear a credit card debt by only making minimum repayments. Meanwhile, interest payments will be eating away all your potential savings while you’re ultimately just treading water. If this sounds familiar, it’s time to make a change and quickly. You should get your priorities right by making a plan, sticking to a budget, and saving as much money as possible to settle your outstanding debts.
Spending more than you earn
The biggest sign of money problems is where your spending eclipses your income. Regardless of whether you have a healthy savings account, you should always ensure that your income is more than your expenses, it’s just basic maths really. If you find yourself in a bad habit of spending far too much, it can become addictive and lead to even more issues, in addition to potential financial difficulties. Some people attempt to mask this problem by paying bills with their credit cards which basically makes the issue worse in the long run. Do you even know if your earnings is more than your spending? If you’re not sure, it’s probably a good time to find out and make some modifications.
You have new clothes in your wardrobe that you don’t use
A practical way to assess if you have money problems is to search through your wardrobe. Do you have clothes that still have the tag on them? Everyone loves a sale, and it’s a great way to save money when cash is tight and you need something. But purchasing clothes solely because they’re on sale may suggest that you have money issues. If this is the case, you may also be inclined to purchase other items simply because they’re on sale too. Buying nonessential items under the perception that you’re saving money is something that should be corrected.
Regardless of how much you get paid, if you’re not good with money then now is the time to adjust your habits to avoid possible complications in the future. If any of these warning signs sound familiar to you, it may signify that you have problems with money and should seek advice before it’s too late. All it takes is one financial blow and you’ll be drawn into the financial abyss. To find out what options you have, or to speak to someone about your finances, reach out to Bankruptcy Experts Wyong on 1300 795 575 or visit http://www.bankruptcyexpertswyong.com.au